Freetrade launching easy access cash investments of up to 5.33%

In a move to give investors more reasons to leave their cash parked with Freetrade, the neobroker will today announce the launch of cash investments, AltFi can reveal.

The investments are a mix of low-risk GBP and USD ETFs which can give investors access to overnight interest rates and the ability to access their cash anytime.

With benchmark rates of up to 5.33 per cent, far better than most high street banks, Freetrade is also making cash investments ISA and SIPP eligible, meaning they can be included as part of a larger tax-free portfolio of investments.

“With rising rates and volatile stock markets, cash or cash-like investments are increasingly looking like a sensible place for investors to park their cash,” Alex Campbell, head of communications at Freetrade said.

“If a very low-risk fund can be expected to generate a return over 5 per cent over that period, investors can sit back and offset inflationary headwinds while they wait for investment opportunities to emerge.”

Rising interest rates have led many investors to park deposits in high interest savings accounts and move away from stock market investments, Freetrade’s new launch looks to be a move to combat that.

“These funds offer investors greater flexibility than savings accounts and returns that track overnight lending rates, not the whims of banks. Unlike savings accounts, these ETFs can be bought and sold during market opening hours, their returns track the latest benchmark rates set by central banks, and they can be held with cash already inside a tax wrapper,” Campbell added.

Among the specific ETFs available are Lyxor Fed Funds US Dollar Cash UCITS ETF and Xtrackers II GBP Overnight Rate Swap UCITS ETF 1 D.